Relaunching securitisation in the EU - Eurofi

Context

The Covid19 crisis demonstrates each day the essential role played by a well-functioning banking sector. Whenever financial markets collapse, they represent a vital way to swiftly channel funds to the real economy where it is most necessary. Securitisation helps to partially remove credit risk from bank balance sheets, enabling banks to recycle and reallocate capital and strengthen their capital ratios.

Since securitisation products played a significant role in the US subprime mortgage crisis beginning in 2007, despite the reliability of European securitisation markets, a deep overhaul of the framework has been achieved by EU institutions. A regulation includes now due diligence, risk retention and transparency rules in addition to a set of criteria that help identifying simple, transparent and standardised (STS) securitisations.

In parallel specific more risk-sensitive capital requirements for banks and insurance undertakings, reflect the specific features of STS securitisations.

Yet, European securitisation markets have remained subdued. Does the disappointing limited recovery of these markets reflect concerns among investors regarding the risks associated with the securitisation process itself? Or does not it rather suggest that these EU prudential frameworks require urgent attention, should addressing the current unprecedented financing needs require being able in the EU, to permanently strengthen bank balance sheets?

Contributions to the policy debate

Extracted from the main Eurofi publications (Regulatory Updates, Views Magazines and Conference Summaries)

Key Eurofi
documents

Eurofi policy note

Relaunching securitisation in the EU - April 2020

Session summaries

Priorities for relaunching securitisation - Lisbon Virtual Seminar Lisbon virtual event - April 2021 new

How to relaunch securitisation in the EU - Berlin Financial Forum - September 2020

Tackling long-term investment disincentives - Helsinki Financial Forum - September 2019

Future for securitization in the EU ? - Bucharest High Level Seminar - April 2019

Public and private
sector views

Public authority views

P. Dejmek Hack - DG for Financial Stability, Financial Services and Capital Markets Union, European Commission - What is next for EU securitisation? - April 2021 new

D. Laboureix - Autorité de Contrôle Prudentiel et de Résolution (ACPR) - Deepening the EU securitisation market: a key step for the Capital Markets Union - April 2021 new

F. Parente - European Insurance and Occupational Pensions Authority (EIOPA) - Securitisation: an appropriate treatment to ensure policyholder protection - April 2021 new

O. Gilvarry - Department of Finance, Ireland - Building on what has been achieved to date from the securitisation regulation - September 2020

S. Raspiller - French Ministry of Economy and Finance - The development of STS securitization is a must have - September 2020

M. Merlin - European Commission - Strengthening the role of securitisation in the EU - September 2020

M. Merlin - European Commission - The STS label has kicked off to a good start, but fine-tuning needed - April 2020

P. Tang - European Parliament - Securitisation done right - April 2020

Industry views

A. Batchvarov - Bank of America - EU securitisation revival requires CMU level-playing field - April 2021 new

N. Esnault - Crédit Agricole CIB - Securitisation at the service of the European economy - April 2021 new

P. Bordenave - BNP Paribas - A true revival of securitization is now urgent - September 2020

A. Glaser - Santander Consumer Bank Germany - Securitization the key instruments for a post Covid recovery - September 2020

J-P. Hülbert - True Sale International GmbH - Securitisation and STS: contribution to financial markets stability in the EU - April 2020

A. Batchvarov - Bank of America Merrill Lynch - EU regulatory framework: enabler or barrier to securitisation in CMU? - September 2019